Regulating Tax Preparers: A Global Problem for the IRS

Abstract

The IRS recently announced that its mandatory registration regime for paid tax return preparers, struck down in the Loving decision, would henceforth be offered as a voluntary program. But the authors of this program appear to have forgotten that the US system is perfectly global in reach, thanks to its permanent inclusion of citizens and others with legal residence status no matter where in the world they live. Protecting a global taxpayer population from fraud and abuse is an enormous task, with massive legal, administrative, and even diplomatic factors to consider. Citizenship taxation plagues the project of tax return preparer regulation, just as it does all aspects of US tax law. Accepting the universally practiced norm of residency-based taxation is the only viable solution. If Congress cannot do so, it will always be the case that for the IRS, thinking locally truly means acting globally.

Keywords: citizenship, nationality, taxation, international tax, regulation, FATCA, FBAR, globalization, IRS, administration, penalties

JEL Classification: H11, H21, H87, F02, F50, F53, F59, Z13, E63, H2, K33, K34, N40, P45